In recent months Australia has shown the regulatory race underway to create a transparent and coherent framework for digital currencies. ASIC's consultation, Government funding and the Senate Committee on Australia as a Technology and Finance Centre (Committee) consultation all show that Australia is truly on a precipice of important regulatory guidance. The Committee's report, set to be released in in October, is central to this.
The report will focus on the size and scope for Australian businesses and consumers to grow into a stronger tech and finance centre. In Senator Bragg's recent piece in The Australian, he expresses that Cryptocurrency is here for good. He also expresses the value that cryptocurrencies and decentralised finance (DeFi) can have on Australia.
The combined market capitalisation of all 11,145 cryptocurrencies is roughly equivalent to the nominal GDP of Canada.
What's more impressive is that DeFi accounts for $180bn AUD in assets which, according to Coinbase co-founder Fred Ehrsam, is only 1/10 of 1% of its potential value.
But the market must be regulated to prevent scams, fraud, uncertainty and hesitation. In addition, Senator Bragg addresses the unique position of the industry where participants are well and truly calling for government intervention. Specifically, Bragg stated that "I have never heard so many people cry out for regulation!". And thus this presents the opportunity that:
"If Australia addresses this gap in the right way, we could attract an enormous amount of new investment and jobs."
While one in five Australian's own cryptocurrencies, according to a survey by Finder, many still believe the risk to consumers is far too great. Notwithstanding the dynamic nature of regulation in this space, consumers are exposed to DeFi, blockchain and crypto markets on a daily basis.
Whilst Senator Bragg cites that the emergence of cryptocurrencies were forged from a foundation of turning away from middlemen and intermediation (potentially being the catalyst for some consumer hesitation) - this should not continue to hinder regulators from embracing the opportunities that may flourish in a well regulated system. In turn this is not a matter of choice but necessity to limit regulatory arbitrage becoming a feature of fintechs in the sector.
We applaud the continued public stance of Bragg in championing progressive moves towards blockchain regulation after the recent open call on reddit for comments. Like the rest of the blockchain industry we await to see the recommendations for how these obstacles should be addressed in the Committee's report in October.